IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20150508

Docket: S126122

Registry:
Vancouver

Between:

Provincial Health
Services Authority

Plaintiff

And

Crothall Healthcare,
a division of Compass Group Canada Ltd./

Groupe Compass
Canada Ltee., Compass Group Canada Ltd./

Groupe Compass
Canada Ltee., Nilfisk-Advance Canada Company and

Nilfisk-Advance,
Inc.

Defendants

And

Nilfisk-Advance
Canada Company and Nilfisk-Advance, Inc.

Third
Parties

Before:
Master Baker

Reasons for Judgment

ISSUE

[1]            
The third parties, Nilfisk-Advance Canada Company and Nilfisk-Advance,
Inc. (“Nilfisk”) challenge pleadings by the defendants Crothall Healthcare, a
division of Compass Group Canada Ltd./Groupe Compass Canada Ltee. (“Crothall”).
In particular they challenge Crothall’s third party notice filed December 20,
2012 as amended June 20, 2013 arguing that the amendments are invalid, having
created a new cause of action and having been made without consent or leave of
the court. In this, Nilfisk relies primarily on Rules 3-5(8) and (13) and Rule
6-1(1) of the Supreme Court Civil Rules[1].
In the result, Nilfisk asks that portions of the third party notice be struck.

BACKGROUND

[2]            
The claims in this action arise from a fire at the plaintiff’s hospital
December 26, 2010. Crothall was performing caretaking and/or janitorial
services under contract to the plaintiff and was using a Nilfisk floor-scrubber
which is alleged to have caused the fire. The plaintiff commenced this action
September 5, 2012 and on December 20, 2012, Crothall filed a third party notice
claiming contribution and/or indemnity from Nilfisk-Advance Canada Company (“Nilfisk
Canada”).

[3]            
On June 19, 2013 the plaintiff added Nilfisk-Advance, Inc. (“Nilfisk Inc.”)
by consent as a defendant and on the 20^th, again by consent, Crothall
added Nilfisk Inc. to its third party claim for contribution and indemnity.

[4]            
Finally, on September 16, 2013, Crothall filed an amended third party
notice adding an allegation of negligence against both Nilfisk entities (i.e.
both Nilfisk Canada and Nilfisk Inc.). Crothall alleged that Nilfisk was liable
for cleaning, repairing, restoring, or replacing Crothall’s equipment lost in
the fire. At the hearing of this application Crothall alleged those damages to
be over $146,000. It is interesting that, on an online review of the court
file, I cannot find any filed response to the third party notice, either in its
original or amended form.

[5]            
As the cause of action arose in December 2010, the previous Limitation
Act[2]
applies.

PARTIES’ POSITIONS

Nilfisk

[6]            
First, Ms. Cleary for Nilfisk argues that the limitation for all claims
is clear and was known throughout by all parties: December 26, 2012. The
amendments alleging negligence then, made on September 16, 2013, raise a new
cause of action (i.e. entirely separate from the claims for indemnity and
contribution) and are therefore out of time. Moreover the September 2013
amendments, being the second ones, require leave of the court[3].
Potential independent liability on the part of Nilfisk Canada, she argues, was
clearly known to Crothall almost from the very outset; in its response to the
notice of civil claim Crothall in Part 1, Division 3, para. 2 alleged:

Further and in the alternative, if
the Plaintiff suffered any injury, loss, damage, or expense, which is denied,
then such, (sic) loss, damage, or expense was caused or contributed to
by the fault of the defendant Nilfisk Advance Canada Company (“Nilfisk”)
particulars of which are as follows:

(a)  failing to ensure that a floor
scrubber manufactured and supplied by it…was free from defects

(emphasis added)

Also, in its original third
party notice filed December 20, 2012, Crothall alleged at Part 1, para. 7:

Nilfisk owed a duty of care to the Plaintiff to:

(a)  ensure that the Floor Scrubber it
manufactured…

(emphasis added)

Crothall could therefore have claimed against Nilfisk
Canada, at least, in negligence within the limitation.

[7]            
As is clear by now, there are two Nilfisk entities and Ms. Cleary makes
separate arguments for each. For Nilfisk Canada, she argues, as above, that
Crothall has simply missed the limitation knowing within the limitation that Nilfisk
Canada could be liable. Anticipating Crothall’s argument of postponement respecting
Nilfisk Inc., she argues that any postponement against Nilfisk Inc. is
mitigated or countered by Crothall’s lack of due diligence. In any event, she
says, the authorities place a heavy onus on Crothall to, among other things,
show a real and substantial connection between the new claim such that a
dependency between the third party claim and the original claim by the
plaintiff be shown and that there be a reasonable explanation for the delay.
Neither of these elements have been established by Crothall, she argues. Quite
the contrary; she submits that should the plaintiff discontinue its claim
against Crothall, for example, Crothall’s claim in negligence against Nilfisk
for damage to or loss of Crothall’s property (para. 4 above) would, as
presently pled and constituted in the third party notice, continue. It is not,
in other words, dependent upon the plaintiff’s claim.

Crothall

[8]            
Mr. Dineley, for Crothall, responded to the application, in my view,
from two different perspectives: a) the procedure taken and Rule respecting the
September 2013 amendments and b) the limitations/prejudice. Respecting the
first argument, he submitted:

1)       The September 2013 amendments was not the second
amendment because the June 2013 amendment was not a first amendment (or
indeed, an amendment at all) within the meaning of Rule 6-1(1)(a);

2)       At worst the September 2013 amendment, if found to
be a second amendment made without consent or leave, should properly be
regarded in the modern view as an irregularity, not a nullity, and should be
permitted by Rule 22-7(1);

3)       In any event the amendment should be permitted as
the authorities direct a liberal approach to amendments and multiplicity of
proceedings should be avoided.

Regarding
the limitations/prejudice issue he argues:

1)       Section 4(1)(b) of the Limitation Act permits
the commencement of a third party proceeding after a limitation:

(1)  If an action to which this or
any other Act applies has been commenced, the lapse of time limited for
bringing an action is no bar to

(b)  third party proceedings

2)       The running of the limitation against Crothall was
suspended in any event by s. 6(4) of the Act:

Time does not begin to run
against a plaintiff or claimant with respect to an action referred to in
subsection (3) until the identity of the defendant or respondent is known to
the plaintiff

because Crothall did not learn the
identity of the manufacturer of the scrubber until April 2013;

3)       Nilfisk applies the wrong standard and the wrong
authorities to the question; the proper standard to apply to the issue requires
that the court apply greater liberality in its discretion and that the possible
expiry of a limitation is only one factor in considering that discretion;

4)       In any event no
presumption of prejudice against Nilfisk applies, as Court of Appeal authority
directs that that presumption does not arise until after one year (i.e. for service
of the notice of civil claim) following the expiry of a limitation. Since the
steps taken in September 2013 were well within the three years following the
event on December 26, 2010, no prejudice is presumed, and, Mr. Dineley argues,
Nilfisk has not pointed to any prejudice.

[9]            
In addition to the above, Mr. Dineley also submits that, in effect, both
Nilfisk entities have been aware for some time of their potential tortious
liability, albeit to the plaintiff. He argues that the facts and circumstances
giving rise to possible liability to the plaintiff are identical to those
supporting liability to Crothall, save for different damages suffered by two different
parties. Nilfisk Canada has been a defendant to the plaintiff’s claims since
the start of proceedings and Nilfisk Inc. consented in June 2013 to be added as
a defendant to the plaintiff’s claim.

ANALYSIS

[10]        
Was the procedure taken by Crothall in September 2013 a second amendment
within the meaning of Rule 6-1(1)?  That rule provides:

1) Subject to Rules 6-2 (7) and (10) and 7-7 (5), a party may
amend the whole or any part of a pleading filed by the party

(a) once without leave of the
court, at any time before service of the notice of trial, or

(b) after the notice of trial is
served, only with

(i)   leave of the court, or

(ii)   written consent of the
parties.

(emphasis added)

[11]        
The answer, I think, lies in Mr. Dineley’s argument, above, respecting
the June 2013 step taken by Crothall. To repeat: at that time the only effect
of the step was to add Nilfisk Inc. to the existing third party claim which, it
should be remembered, was one limited to contribution or reimbursement only.

[12]        
I agree with Mr. Dineley’s submission in this respect: the June 2013 procedure
was not an amendment within the meaning of Rule 6-1(1). I agree with his
submission, but not his reasons: he argued that, since the amendment was made
by order, with the consent of the affected parties, it is not a first or “free”
amendment. I am not prepared to go as far as his logic and to conclude that,
because an opposing party consents, the amendment is not a first amendment
within the meaning of the Rule. He may be correct, but I conclude that the June
20, 2013 amendment was not, essentially, an amendment per se, but rather the
addition of a party. Obviously the addition of any party requires a change to
pleadings (e.g. to identify that party and explain the reasons for its
involvement). But the Court of Appeal has recently taken pains to emphasize the
difference between amending pleadings on the one hand and adding parties on the
other[4],
and the importance of using the different rules accordingly. One applies Rule
6-1 to amend, and Rule 6-2 to add, substitute, or change parties. What happened
in June 2013 was clearly a step under Rule 6-2; it was not an amendment as
contemplated by Rule 6-1; in fact Rule 6-1 is clearly “…subject to Rule
6-2(7)…”

[13]        
Beyond that reasoning, it seems obvious that Rule 6-1 contemplates a
change to pleadings that affects existing parties. Those parties,
reasonably, should be protected against repeated or too-facile changes to the
claims against them. To add a party does not change the claim against existing
parties; it only offers the possibility of shared blame. It is hard to see how
the addition, as here, of a co-defendant could prejudice or work against an
existing party[5].

[14]        
As a consequence, the step taken in September 2013 did not require the
consent of the existing parties or a court order as it was the first amendment,
a case planning conference had not been held, and no notice of trial had been
delivered.

[15]        
If I am wrong in this I agree that, in any event, the September 2013
amendments should, as argued by Mr. Dineley, be regarded as an irregularity at
worst, and not a nullity as submitted by Ms. Cleary. Ms. Cleary argues that her
position is supported by the decision in Minneapolis Threshing Machine
Company v. Clessen and Clessen[6].
Apparently the Alberta Rules at the time required a court order allowing the
amendment in question. Since the order had not first been obtained, the court
held (at para. 3) “An amendment of this nature is not an irregularity which can
be cured but a nullity” and proceeded to refer to an authority that explained
the difference.

[16]        
Mr. Dineley submits that the law has changed since 1930, and that that
change is recognized by Rule 22-7(1). I agree with his position, that the
approach by the court is substantially more nuanced and, as McEachern CJBC observed
in International Forest Products Ltd. v. Moody[7]
“…there has been a noticeable softening of the formerly stern view the courts
used to apply about such matters” and posited that that approach derived, in
part, from the intent of the Rules expressed in the then-Rule 1(5), seeking
“…the just, speedy, and inexpensive determination of every proceeding on its
merits”. He also referenced Lord Denning’s comment in Harkness v. Bell’s
Asbestos and Engineering Ltd.[8]
that:

Every omission or mistake in
practise or procedure is henceforward to be regarded as an irregularity which
the court can and should rectify so long as it can do so without injustice.

I cannot see that to treat the incident as a curable
irregularity creates an injustice to either of the Nilfisks. Nilfisk Canada’s
adjusters, at least, were put on notice in August 2011 by Crothall’s adjusters
of the possibility of a subrogated claim. Nilfisk Canada was joined at the
outset by the plaintiff on a claim in tort, and by consent Nilfisk Inc. was
added to that claim. Surely both Nilfisk entities must have been alive to their
potential tort liability, as opposed to liable simply for contribution.

Limitation

[17]        
Did Crothall miss its limitation when it amended in September 2013 to
claim against both Nilfisks in tort?  Ms. Cleary argues that it did, as the
limitation expired, she says, on December 26, 2012. Even if there is an
argument for postponement, she submits, it does not run in Crothall’s favour as
Crothall did not exercise due diligence in determining the manufacturer of the
scrubber.

[18]        
Some facts and evidentiary observations might be appropriate. First, it
is agreed all around that Nilfisk Inc. is the manufacturer and Nilfisk Canada
the distributor. But when did that fact become clear, and when did it become
clear to the various parties?  Much, if not all, of the investigative work done
to determine the cause and circumstances of the fire was done by the parties’
respective adjusters. Crothall’s adjuster was Granite Claims Solutions and
Nilfisk Canada’s was ClaimsPro Canada.

[19]        
Granite Claims Solutions, in its previous name of McLarens Canada,
commissioned an investigation and report by Mr. Richard van Leeuwen P.Eng., an
expert electrical engineer. Mr. van Leeuwen’s report is thorough and explains
in a clear and logical manner how the scrubber likely caused the fire. What
interests me is photo 24 to Mr. van Leeuwen’s report[9].
The photo shows the nameplate to “the most damaged” scrubber. The only
corporation identified on the nameplate is “Nilfisk Advance” with another reference
“Nilfisk Advance Inc., Plymouth MN, USA www.nilfisk.advance.com”. This would
suggest that the adjusters for Crothall, at least, might reasonably have
inferred by January 2011 i.e. within a month of the fire that the manufacturer
was Nilfisk Advance, Inc. (or “Nilfisk Inc.”, as I have called it).

[20]        
Mr. Dineley did not address that evidence in argument, but submitted
that the issue was confused by the original invoice by which Crothall purchased
the scrubber. Exhibit A to Ms. Read-Olley’s affidavit #1 is that invoice,
numbered 20011726 and dated November 2, 2010. It is headed “Nilfisk Advance”
and directs that payment be remitted to “Nilfisk-Advance Canada Company”. There
is no reference to Nilfisk Advance, Inc. More to the point, Mr. Dineley argues
that even Nilfisk’s counsel was not certain of the manufacturer, and points to counsel’s
e-mail to him of March 27, 2013 wherein Mr. Davies said

We are trying to sort out who the
manufacturer is. I believe the current named party, Nilfisk Canada, was only
the distributor  It may be that we will defend the manufacturer, too, but I am
waiting (sic) instructions

[21]        
Is it reasonable, he argues, to expect Crothall to know exactly who to
sue as manufacturer when Nilfisk’s own counsel was uncertain?  In my view it
is: I have no idea what investigations the plaintiff or its adjusters or agents
had made, but, as I say, Crothall’s agents certainly had the correct identity
within its knowledge. I therefore agree with Ms. Cleary’s argument that due diligence
could have disclosed the correct party within the limitation period.

[22]        
But this is moot, as the Act provides for this circumstance and
permits a third party notice beyond the limitation (para. 8 above). The
permissive s. 4(1)(b) is followed, however, by ss. (3):

Subsection (1) does not operate
so as to interfere with any judicial discretion to refuse relief on grounds
unrelated to the lapse of time limited for bringing an action.

No argument was made respecting
this provision, nor was there any suggestion that grounds other than those
respecting limitations should preclude the amendment. There is a further
subsection to s. 4 that supports Mr. Dineley’s position:

(4)  In any action the court may
allow the amendment of a pleading, on terms as to costs or otherwise that the
court considers just, even if between the issue of the writ and the application
for amendment a fresh cause of action disclosed by the amendment would have
become barred by the lapse of time.

With respect, that provision seems to apply to this
situation.

[23]        
As I have noted, neither Nilfisk entity has filed a response to the
third party notice (in any of its iterations); one might expect that Nilfisk
Canada, had it filed a response, might have denied manufacturing the scrubber
as the initial notice alleged (para. 6, above), thus putting Crothall on notice
respecting the very issue that has arisen.

[24]        
Even if, then, Crothall ought to have known the proper party before
December 26, 2012, has Nilfisk been prejudiced by the amendment?  I agree with
Mr. Dineley’s submission that Nilfisk has not offered any evidence of prejudice.
I doubt, actually, that there is any prejudice likely to either of the Nilfisk
entities. The court of appeal in Amezcua v. Taylor[10]
cited the factors established by Teal Cedar Products (1977) Ltd. v. Dale
Intermediaries Ltd.[11]
that the court must consider respecting late amendments:

–         the extent of
the delay

–         the reasons
for the delay

–         any
explanation put forward to account for the delay

–         the
degree of prejudice caused by delay and the extent of the connection, if any,
between the existing claims and the proposed new cause of action.

Extent of delay

[25]        
In this I agree with Mr. Dineley that there has not been substantial or
even appreciable delay. Approximately nine months passed between the limitation
of December 26, 2012 and the amendments of September 2013. In the abstract, and
even in relation to this action, that is not a significant delay.

Reasons for delay

[26]        
While I have concluded that it was within Crothall’s ability in January
2011 to know that Nilfisk Inc. was the manufacturer, I also acknowledge that
there seemed to be some uncertainty on the point among all counsel (para. 20
above). I am not surprised by that; the two Nilfisk entities are obviously
closely connected, even represented by the same counsel. I doubt one could see
daylight between the two.

Any explanation for the delay

[27]        
I confess that I am at a loss, with all due respect, to know how this
factor differs significantly from the one just discussed. Perhaps the court of appeal
invites us to consider the reasons (“explanation”) given by, in this case,
Crothall to see if they are fanciful or unreasonable. Perhaps my concerns were
shared by Kirkpatrick J.A. in Amezcua, who seemed to conflate the
“reasons” and the “explanation”. While I note the early evidence respecting
Nilfisk Inc. (para. 19 above), I also note genuine uncertainty (para. 20).

Any prejudice arising

[28]        
Unless prejudice is presumed, the party being added must offer evidence
of real prejudice[12].
Since neither Nilfisk entity has offered evidence the question is: is prejudice
presumed?  It is not, in this case, as the amendments are within three years of
the loss and the court of appeal in McIntosh v. Nilsson Bros Inc.[13]
concluded that no prejudice can be presumed before the elapse of the limitation
plus a further year for service of the claim (as per Rule 3-1(1)). No
prejudice therefore being presumed and no evidence having been offered, I
conclude that no prejudice arises by the amendment. Beyond that analysis, I
think that in all likelihood the Nilfisk companies have been considering and
preparing for a tort claim from the outset, as Nilfisk Canada is an original
defendant to the plaintiff’s tort claim and Nilfisk Inc. consented to being
added to that claim.

[29]        
Finally, in applications such as this, the court is always mindful of
the standard set by McNaughton v. Baker[14],
that the court should be liberal in permitting amendments, unless prejudice or
undue delay are established.

[30]        
The application is therefore dismissed. Costs will be in the final
cause.

“Master
Baker”